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Statistics NZ figures show the number of building consents issued in the Wellington region, which includes Wairarapa, dropped from 169 to 113 from July to August this year, compared with 105 in August last year.

A1 Homes Wairarapa construction manager Seanoa Isaac said the changes had coincided with a drop in enquiries. "We're still trying to assess where that's coming from, but we do think [the changes] have a big part to play.

"We've had clients on the books ... that, this time last year, would've been confident they would've come in and paid a deposit."

This year, it had been "unattainable", he said.

The policy wasn't just affecting those looking to build their first home, but older people looking to downsize for retirement.

"Going into retirement, [people] always have a tight budget and they count every penny so it's been the tipping point of not quite being able to build, but going into an existing home," Mr Isaac said.

The restrictions also meant buyers weren't able to take advantage of affordable land prices to build on, Mr Isaac said.

And every house that wasn't built would have a ripple effect on local jobs.

"You lose three, four house sales a year, that's a lot of people affected."

Documents released last week by the bank, Treasury and the Ministry of Business Innovation and Employment showed the potential impact on the supply of new homes was considered but not thought to be a problem.

But even as the policy took effect this month, the federation warned it was already having an impact.

Chief executive Warwick Quinn said that three or four weeks before the policy took effect, "we started to see quite a drastic reduction in some builders' workloads and potential contracts.

"People were walking away and phones stopped ringing."

Master Builders believed the new limits could affect between 2000 and 3000 new builds each year.

"If that happened, [it would] put the construction sector back about two years."